Why Mechel OAO Shares Dropped Today

Why Mechel OAO Shares Dropped Today

What: Shares of Mechel OAO fell as much as 17% today as investors sold off Russian stocks because of a potential conflict with Ukraine.

So what: The Russian ruble hit an all-time low today as Moscow postured for control of Crimea, an area of Ukraine. Stock markets also fell in Russia and around the world. It doesn't help that Russia's central bank raised interest rates 1.5% today, too.

Mechel's position in Russia and $9.4 billion in debt as of December is concerning. Investors don't like the uncertainty that comes with this stock today.

Now what: There are a lot of unknowns right now when it comes to Russia and Ukraine, but investors aren't taking the risk of owning a highly leveraged Russian company such as Mechel today. The sell-off isn't surprising but it also doesn't necessarily mean doom for the mining and metals company if the conflict doesn't escalate. That said, there are a lot of risks, and the high debt load and rising interest rates are a threat to Mechel's long-term survival. There may be a pump if the conflict cools down, but that's not a risk I'm taking today.

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The article Why Mechel OAO Shares Dropped Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published